Dye Industries currently uses no debt,but its new CFO is considering changing the capital structure to 40.0% debt (w_d)by issuing bonds and using the proceeds to repurchase and retire common shares so the percentage of common equity in the capital structure (w_c)= 1 − w_d.Given the data shown below,by how much would this recapitalization change the firm's cost of equity,i.e.,what is r_L − r_U? A)1.66% B)1.84% C)2.02% D)2.23% E)2.45%

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The Answer of Dye Industries currently uses no debt,but its new CFO is considering changing the capital structure to 40.0% debt (w_d)by issuing bonds and using the proceeds to repurchase and retire common shares so the percentage of common equity in the capital structure (w_c)= 1 − w_d.Given the data shown below,by how much would this recapitalization change the firm's cost of equity,i.e.,what is r_L − r_U? A)1.66% B)1.84% C)2.02% D)2.23% E)2.45%

Dye Industries Currently Uses No Debt,but Its New CFO Is